Norman L. and Catherine J. Forste - Page 1

                                T.C. Memo. 2003-103                                   

                               UNITED STATES TAX COURT                                

                  NORMAN L. AND CATHERINE J. FORSTE, Petitioners v.                   
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 12393-00.             Filed April 16, 2003.                 

                    Following P’s assertion of numerous tort and                      
               nontort causes of action, P and his employer entered                   
               into a settlement.  P excluded from gross income                       
               $45,615 that he received from his former employer under                
               the settlement agreement.  P claims that this amount is                
               excludable under sec. 104(a)(2), I.R.C., as damages                    
               received on account of personal injuries and that the                  
               burden of proof is on R pursuant to sec. 7491, I.R.C.                  
                    Held:  Under sec. 7491(a)(1), I.R.C., if the                      
               taxpayer produces credible evidence as to any factual                  
               issue relevant to his tax liability, the burden of                     
               proof as to that issue shifts to the Commissioner.                     
               What constitutes a relevant factual issue for purposes                 
               of sec. 7491, I.R.C., is determined on the basis of the                
               circumstances of the particular case and the relevant                  
               law.  The factual issue in this case is what amount, if                
               any, of the $45,615 P received pursuant to the                         
               settlement agreement was paid as damages for tort or                   
               tort type personal injury claims.  P produced credible                 

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